Its A Tough One …

Considering that it already has your money – assuming you’re a taxpayer – there’s no obvious reason for the National Health Service to start suggesting to its patients that they should take their custom elsewhere. If your Ryanair flight to the Mediterranean is delayed by three hours, after all, the company doesn’t apologise, give you your money back and urge you to rush to the EasyJet counter. Yet lately, strange things have been happening in the NHS.

Last year, to take only one of tens of thousands of examples, Madhukanta Patel, a 59-year-old social services worker from Herne Hill, south London, began to suffer intense pain in her left knee. X-rays showed that two bones were rubbing together. In April, a consultant at her local hospital, King’s College, told her that she needed a new knee, and offered to put her on the waiting list for the operation.

Mrs Patel mulled it over during the summer before deciding to have the operation. In September she went to her local GP, Sadru Kheraj, to arrange a fresh consultation. Kheraj pointed out that normally she would have to wait a long time for the operation. But he was able to offer her something unusual: a choice. She could go to King’s, and wait four or five months to end the pain. Or she could go to a private hospital, a branch of the Capio chain near Gatwick, and have her new knee in place in a fortnight. The NHS would pick up the bill, and they would organise transport to Gatwick and back.

A painful condition, a necessary operation, and the choice of a free private hospital with no waiting list versus an NHS hospital with a long waiting list – Patel’s choice might seem obvious. It wasn’t. “She refused to go to the private hospital,” says Kheraj, a thoughtful, softly spoken man who enjoys discussing the mysteries of patient choice. “Her reasons were because, first, she wouldn’t get any rehabilitation. I explained that she would … then she said, ‘Yes, but it’s too far for my husband to visit.’ So basically I couldn’t persuade her. I’ve offered three patients the possibility to go private: a knee operation, a hip operation and an orthoscopy to look inside a joint. None of the three decided to take it up.”

Sitting at home, with her NHS-fitted knee up on the sofa – she waited five months, in the end – Patel says she chose King’s because it was familiar. “My children were born in that hospital. That was the main reason why we were sticking to our guns. We wanted the local hospital.”

It sounds like a vindication of those who argue that people don’t want more choice in public services, but just want their local school and hospital to be better. Yet it isn’t, quite. Patel says was glad to have been offered a choice. “If we’d been given a choice of Guy’s or St Thomas’s” – two other NHS hospitals in south-east London – “we would have gone for it.”

Such a choice is coming, like it or not. Both Labour and the Conservatives, more than ever in this election, are promoting the idea of choice in the public sector: choice for patients in health, choice for parents in education, choice for tenants in state-funded housing, choice for everyone in pensions.

In two near-simultaneous speeches on June 24 last year, Tony Blair and Michael Howard hoisted the banner of choice. “Choice puts the levers in the hands of parents and patients, so that they as citizens and consumers can be a driving force for improvement in their public services,” said Blair. Howard: “Waiting lists are a British disease and the right to choose is the cure.” The big parties’ election manifestos also reflect this obsession. “One principle underpins our reforms – putting patients centre stage. And extending patient power and choice is crucial to achieving this,” declares Labour. The Conservatives: “We will give parents the right to choose … we will give patients and GPs the right to choose … ”

In the campaign so far, the big parties have found it useful to exaggerate the differences between them on health – Labour to frighten wavering supporters with the bogus spectre of fees for NHS operations, the Tories to pretend that they have come up with something original. But the curious truth is that in health, the Labour government is already introducing an extraordinarily radical new policy of patient choice which, even if it doesn’t work as it is supposed to, will transform the way NHS hospitals operate. And, for patients who can’t afford to pay private fees, the Conservative party offers almost exactly the same policy.

In other words, if you need a hip replaced in three years’ time, you’ll be offered a choice of hospitals in which to have it done. What you don’t have right now, politically, is a choice about whether you want that much choice in the NHS. That has already been decided.

“In principle, I think choice is good, as long as we don’t think it’s the same as going shopping in the supermarket,” says Kheraj. “I’m not saying ‘doctor knows best’. But I think making informed choice is actually very difficult. Which elements of making a choice are important are not clear to me. Is it the ‘hotel’ element of a hospital, the convenience, or is it the quality of the surgery? Just because it’s a nice building, with nice chairs and nice coffee, that might not be enough.”

It was in West Africa, 40 years ago, that the ideas that inspired Labour’s 21st-century policies on choice were born, when an American economist working for the World Bank, Albert Hirschman, found himself investigating a mystery. The Nigerian state railway had a monopoly on freight transport by rail, but companies were shunning it, and using trucks instead. It was easy to understand why firms preferred road transport: the railway was badly run. The mystery was why, if trains were losing business to the highways, the people running the railway didn’t try to improve it.
Hirschman worked out that the railway had found the worst possible balance between customer “voice” and customer “exit”. In order to realise that they were doing a poor job, he argued, organisations had to be sent a message by the people who used their services. That message could only take two forms – “voice” (a complaint, appeal or protest) or “exit” (people leaving to get the service somewhere else).

With the Nigerian railway, it was simple enough for the most energetic and wealthy customers to leave for the roads. But their departure weakened the voice of the poorer, less dynamic customers who couldn’t or wouldn’t get out. The management’s awareness that the state wouldn’t let the railway go out of business weakened the voice of the remaining customers still further.

The book Hirschman was inspired to write by his Nigerian experience, Exit, Voice and Loyalty, published in 1970, became the starting point for a group of Britain’s leftwing thinkers when they set out on their journey towards embracing choice. Hirschman’s argument was that if you made it too easy for customers or citizens to exit an organisation – if they could go from a bad service to a good service by paying a bit more money, for instance – the voice of those left behind would be ineffective, and the bad service would stay bad. But if you made it too hard to exit, the power of “voice” risked being weakened, because the bosses of the organisation would know that the customers had nowhere else to go.

It’s easy to see why, when it appeared, Hirschman’s book struck a chord with centre-left British politicians and economists who were worried that the welfare state wasn’t working out as planned. The middle classes were either finding ways to exploit it to their advantage, or were leaving it for private health and education. Instead of using their powerful voice inside the system as persuaders for change, they were choosing exit.

Although the book doesn’t mention Britain, Hirschman’s description of “lazy monopolies” must have seemed to critics of the welfare state like a fair description of the worst parts of the state health and education systems: “An oppression of the weak by the incompetent and an exploitation of the poor by the lazy, which is the more durable and stifling as it is both unambitious and escapable.”

During the 70s and 80s, looked at through the prism of Hirschman, the left and the right in Britain were polarised. The left wanted to reduce the possibilities for exit and promote voice by, for instance, abolishing private schools. The right wanted to increase the possibilities for exit through privatisation and school vouchers. The centre brooded away, and has now come up with its own solution: choice.

In effect, the idea is to improve the public services by rolling exit and voice up in one. You get to choose a different school or hospital rather than accepting the one you’re given – that’s your exit. But you might not take it; and even if you do, you’re usually exiting from one part of the NHS or the state education system into another, and the government’s still paying. It’s the possibility of exit that keeps your voice being heard in the system.

“I think there was a feeling during the 80s and 90s, following the collapse of the Soviet Union, that on the whole, exit, or choice as we prefer to call it, is more powerful an instrument for improving services than voice, although obviously there’s a role for voice,” says Julian le Grand, who is No10’s health policy adviser and the key thinker at the heart of the Blair government’s policies on choice. “You don’t necessarily want to take your child out of school at the first sign of dissatisfaction, but on the whole, voice, when it is powerful, gets its power from the power to exit.”
A rightwing economist reading that would probably be wiping away tears of laughter by now. All that anguish on the left! All those furrowed brows, to work something out we’ve been telling them for centuries!

There is some truth in this. For the Conservatives, the rhetoric of choice is a natural extension of their old idea that the state is incapable of making a useful judgment of what things are worth: only self-interested, individual buyers in a market can, which is why the state is an incompetent manager of enterprises. That idea goes back to Adam Smith in the 18th century but was put explicitly, in response to the 20th century rise of communism, by the Austrian economist Ludwig von Mises and his disciple (and Margaret Thatcher’s idol) Friedrich von Hayek. The only ideological refinement that has been required of the Tories since the rampant days of Thatcherism is an acceptance – as they now assure us – that health and education will continue to be funded out of taxes.

But there’s a problem for the Tories, and that’s where Hirschman’s ideas are, to them, heretical. The rightwing idea of choice only works when bad organisations are allowed to shrivel and die. State schools and hospitals can’t be allowed to do that; the Conservatives now say they accept this.

When I talked to Le Grand’s Tory counterpart, Lord (Norman) Blackwell, it was striking how often he referred to children “escaping” from bad state schools. Choice as a means of exit, rather than a means of reform, has become the defining difference between the right and the left. The Conservatives put the emphasis on enabling patients and parents to “escape” the tyranny of a bad hospital or school: Labour is still concerned about the fate of those left behind.

In 1989, 19 years after his best-known book was published, Hirschman watched in fascination as television news reports showed the unravelling of East Germany’s socialist dictatorship. The process that ended with the demolition of the Berlin Wall and the reunification of Germany began with the flight of hundreds of thousands of East Germany’s most talented and ambitious citizens across the suddenly porous borders.

The extraordinary change of regime had special resonance for Hirschman, and not just because he’d been a refugee from Nazi Germany half a century earlier. In the mass emigration from communist Germany, Hirschman saw a direct relationship to the flight of citizens from state hospitals, state schools or incompetent private monopolies in modern democracies. But what intrigued him was the way in which the mass exit from the DDR strengthened the voice of those who stayed behind but wanted reform.”The mass exodus did sufficiently impress, depress, and alert some of the more loyal citizens,” he wrote in an essay some years ago, “those who had no thought of exiting, so that they finally decided to speak out.”

I meet Julian le Grand shortly before the election is announced; he has been closeted for months in No 10, stockpiling intellectual munitions for the coming campaign. He has a kind and slightly ecclesiastical demeanour; I am reminded at first of a chaplain with some band of tough commandos who tries to sneak away from camp occasionally and meditate on the scriptures.
That impression may be unfair. Unworldly and idealistic as his discourse sometimes seems, Le Grand’s CV suggests he should be at home in the messy real world. Apart from advising the World Bank, the European Commission and the World Health Organisation, and holding a series of academic posts – his current one is at the London School of Economics – he has sat on the board of two hospital trusts and two health authorities.

“What people say is: ‘People don’t want choice, they want a good local service’ – as though these were in some way opposites,” he says. “Our argument is that it’s only through choice that you will get a good local service, because it provides the incentives for people to improve. The way to see that is to think about the alternative, which is a monopoly. Does one really think the best way to have a good local service is to chain people to their local school or hospital, and effectively give that school or hospital a monopoly over the service being provided?”

Le Grand contributed the revealing phrase “market socialism” to the intellectual turmoil on the British left in the 80s, but the clearest statement of his views came in a book he published in 2003. When Labour set up the welfare state in the 40s, he argued, it was led astray by memories of the togetherness and common cause inspired by the Nazi threat in the second world war. The party had assumed doctors, hospital managers, school heads and teachers would be inspired by the same altruism and sense of duty to fight disease and ignorance. Patients and parents, meanwhile, were expected to be passive, grateful recipients of whatever they were given.
The reality was that doctors and teachers were as likely to be lazy and patronising as they were to be altruistic and dutiful, and that parents and patients were never going to be merely passive or grateful. Hence the need to put choice into the equation. As long as the state goes on paying, Le Grand tells me, introducing choice will affect institutions like hospitals in two ways. It will spur the hospital to improve, so as not to lose patients, and thus lose income; and it will empower patients.
“You can sum it up by ‘choosing not waiting’,” he says. “If you have to wait, power lies with the person who you’re waiting for. If you don’t have to wait, then power lies with you. The whole business of a waiting list is in essence an expression of power, an imbalance of power.”
Lewisham Hospital in south-east London is a typical English district hospital, providing all sorts of treatment from stitching up foreheads after a late-night rumble to specialist child surgery. It sprawls, low-rise, over a huge area, a maze of buildings of different eras, from its 1890s heart to a £70m new block under construction.

Outside the office of Mark Cubbon, one of the senior managers, is a sign which, he says, is an indicator of the pressure on the system on any given day: “Bed state RED.”

Cubbon explains the implications of what is about to happen to NHS hospitals, whichever party wins. “If we do not provide patients with what it is they want or expect, the risk for us is that we won’t have any patients, and if we don’t have any patients, we don’t have any hospital. Obviously that’s a bit of a far-fetched scenario, but it’s not that difficult to see that kind of pattern emerging … It puts us in a completely different world.”

Lewisham Hospital, like Dr Kheraj’s surgery, is overseen by the south-east London regional health authority, one of 28 such authorities in England. Until recently, when one of the region’s 1.5 million people needed to see a hospital consultant – assuming it wasn’t an emergency – they’d go to see their GP first, who would send a letter to a hospital asking for an appointment.

Sometimes the GP would have more than one hospital to choose from, but usually it was the local one. The patient didn’t have a choice; they’d have to go where they were sent, even if that meant a long wait. “The system, really, was designed around the patient being almost a passive recipient,” says Caroline Ashley, south-east London’s patient-choice director.

Since 2002, south-east London has been offering patients limited choices. Some, like Madhukanta Patel, were given a chance to go private. Around 30,000 patients who would have waited six months or more for “elective surgery” – operations where, literally, it wouldn’t kill you to wait – were telephoned after four and a half months and offered the choice of two alternative hospitals where waiting times were shorter.

But the real choice revolution begins this year, with two changes. Under the first, “Choose and Book”, GPs will offer patients a choice of four or five hospitals, one of which may be private, together with information to help the patient make the selection. By 2008, in theory, patients will be able to choose any hospital they like. Once the patient has made their choice, it is the GP who makes the booking, immediately, using a new computer system. Instead of waiting weeks for a letter from the hospital, the patient should be able to walk out of the surgery with a printout of their first appointment.

But what if everybody rushes off to the “good” hospital? How would it be able to afford to carry out the extra work? That’s where the other, less publicised part of the choice equation comes in – “Payment by Results”. This involves introducing a standard NHS price for every procedure. Wherever a hip is replaced with NHS money, and however it is done, publicly or privately, in Cumbria or Cornwall, the hospital will be paid the same amount.

The implications of this, combined with Choose and Book, are enormous. Choice becomes much more than a “Which one would you like?” issue. It becomes an instrument to force through radical reorganisation of hospitals. A hospital or medical entrepreneur, NHS or private, who works out a way to carry out hip replacement operations quickly, efficiently and cheaply in a way that attracts “customers” – that is, patients – will get the same amount of money per patient as the small local hospital carrying out a couple of hundred hip replacements a year, with much higher overheads. Look out for a branch of Hips R Us near you.

“Why not?” argue the advocates of choice in the public services. They see it as part of the virtuous circle of choice: by letting people choose, you not only empower them and force institutions to be more responsive, you give the institutions an incentive to be more efficient as well. Better and cheaper. It sounds too good to be true.

Le Grand doesn’t think it is. “The case for choice is essentially twofold,” he says. “One is that it’s intrinsically desirable. In other words, that people want it, or even if they apparently don’t want it, it’s desirable, because it gives people a sense of power and control over their lives.

“Second, it’s a means of achieving other ends: a more responsive service, a more efficient service, and indeed a more equitable service. If a hospital trust can do operations at below average cost, it will make a surplus, so it’s got a strong incentive to do so. It’s what good firms do, isn’t it? Higher quality, lower cost.”

There are sceptics. One critic of the mania for choice, Neal Lawson of the leftwing ideas group Compass, warns that once public services begin putting efficiency before fairness, and competitiveness before local democracy, they are setting out on a journey that government will eventually be unable to slow down or stop.

“The thing about capitalism is that it’s dynamic, and winners win, and losers lose. This isn’t a kind of one-off increase in efficiency. Once you go off on this route you have to keep your foot on the pedal all the time,” he says. The fear is of local hospitals losing departments, or the entire hospital shutting down due to lack of demand, like some high street retailer that can’t compete with the retail park on the ring road. “If I want to do a hernia operation here, if I’m going to be getting £1,000 per hernia, no arguments, and it’s costing me £1,200, then I need to do something about it,” says Cubbon. “Because I’m going to go out of business, essentially.”

If Labour is forging ahead with choice in the NHS, it is more wary of choice in education. “People always make the assumption we’re starting from a position of no choice,” says Philip Collins, another thinker influential in forming Blairite choice policy. “Since the 1988 Education Reform Act enshrined the principle of parental choice, the question is not: ‘Should we or should we not have choice?’ The question is: ‘Who actually chooses?'”

In Birmingham, Europe’s largest education authority, parents are supposed to be able to choose from any of the city’s 76 secondary schools, listed in a thick brochure sent out by the council each year. Along with the brochure, parents who have a child about to finish primary school receive a form. They are asked to list, in order of preference, six schools they would like their son or daughter to go to.

What could be fairer? Everyone fills in the same form; everyone picks from the same menu. The practice differs from the theory. In reality, it is the schools that choose, and parental choice becomes almost meaningless. Of the 76 schools in Birmingham, nine are Catholic, one Anglican, and another is for Muslims. If you’re not a church-or mosque-goer, and in many cases even if you are, that leaves 65 schools to choose from – or rather 64, unless your child is one of a small number eligible for the specialist St Paul’s School for children with particular difficulties in “large, mainstream schools”.

Then there are eight grammar schools. They’re state-funded, and they don’t care where in Birmingham you come from. But to get your child into one of them, your son or daughter has to sit a test and come, typically, in the top 10%. If you fear your child won’t make it, or you can’t afford to pay for a private tutor, or if your child falls short in the test itself, the original choice of 76 is reduced to 56.

That’s where the big hurdle really kicks in: the distance factor. Last year, 38 of Birmingham’s non-religious, non-grammar state secondary schools were able to offer places only to children who lived a fixed distance from the school’s main entrance. In the most extreme case, that meant that, unless your child already had a brother or sister there, you had to live no further than 500 metres from the popular Small Heath School if you wanted him or her to go there.

If you subtract those 38 schools, what’s left? There were 15 schools in Birmingham last year that were able to offer places to anyone who wanted them. The original total of 76 has shrunk by four-fifths – and although by no means all, or any, of those 15 schools should be considered deficient, the choosing parents might be forgiven for wondering what it is about those schools that makes them undersubscribed.

As if the clash of parent choice and school selection wasn’t complicated enough, there are two further twists. One is gender. Twenty-two of Birmingham’s secondary schools are single sex, but there are almost 2,000 new places this year for girls, and just 1,066 for boys. The other is the growth of “specialist schools”, which offer a higher, more intensive level of teaching in a particular set of subjects such as technology, sports or language. They are, in principle, allowed to select 10% of children according to a test for ability in that specialism.

In other words, if you’re poor and secular, it doesn’t matter much what you put on the preference form – you’d better hope there’s a decent school on your doorstep. If you’re relatively well-off or religious (although there is only one Muslim secondary school, all-girls schools have strong support from Birmingham’s large Muslim community) you can make the system work in your favour. Even if you can’t afford to send your child to a private school, you can pay for a private tutor to coach them for the selective school exams, or pay the heavy premium required to buy a house inside a popular school’s catchment area.

“The reality is that choice isn’t there. The ability to express a preference is there,” says Tony Howell, director of education for Birmingham city council and thus the man in charge of seeing over 100,000 pupils in the city get a good education. “Does it work? A technical answer would be that it does in a vast majority of cases – the overwhelming majority of parents get one of their choices. That could be your definition of ‘working’. But I think if they get fourth or fifth choice, a lot of parents feel it’s not working very well. I think most parents want their first or second choice.”
In the Moseley Heath area of Birmingham lie two schools that are both state funded, and only a mile apart, but otherwise occupy different worlds. Measured by exam results, and by the improvement in academic performance of pupils, King Edward VI Camp Hill School for Boys is one of the best schools in England. This is not surprising, since as a grammar school it takes only children capable of getting top marks in an exam-style test. Last year, 1,241 parents put it on their preference sheet: fewer than 100 were successful.

The head, Vincent Darby, is an enthusiast for the present system. The point about the grammar schools, he says, is that they aren’t just for middle-class children in leafy suburbs: they are for anyone in Birmingham, of any income, colour or creed, who is able to get high marks in a test. Darby is resentful that the government doesn’t allow him, as head of a popular grammar, to expand. He’d like to grow by 10%, no more. “Not to close down other schools,” he says, “but to increase the choice for parents who want this kind of education.”

Yet the balance of pupil numbers and pupil funding is already so tight that a handful of extra places cut or added here or there can have an unintended impact on other schools. At Queensbridge School, a non-selective mixed comprehensive only a mile away, the head teacher Tim Boyes is asking some angry questions. If choice is working so well, he wonders, how come 49% of the children who came to his school last year had special educational needs? Why does his school have 70% boys and 30% girls?

With the help of extra government spending Boyes, a recent appointee described in the latest Ofsted report as “inspirational”, has raised his school’s performance and reputation. But he remains troubled by the attitude of the kind of local parents New Labour seems to have listened to since it was elected.

“I’ve watched middle-class parents talk glowingly about my school on the up, and about the value of local comprehensive education – then explain to me why they’ve got their child into a selective school. That’s the really insidious thing, that a government with its roots in principles of social justice has so completely bought into very flawed ideas around choice, because it’s simply the choice of the more powerful to get themselves ahead, and get something better for their own children, which means, inevitably, there is a poor relation.”

Some sceptics of the benefits of choice argue that it is not just the left-behind who suffer. In his recent book The Paradox of Choice, the US psychologist Barry Schwartz, drawing on decades of research by psychologists and economists, concluded that many well-off people, seemingly blessed by the chance to choose from a multitude of possibilities, were instead burdened down by an excess sense of responsibility and regret.

“You can actually experience regret in anticipation of making a decision,” he writes. “You imagine how you’ll feel if you discover that there was a better option available. And that leap of imagination may be all it takes to plunge you into a mire of uncertainty – even misery – over every looming decision … Learning to choose is hard. Learning to choose well is harder. And learning to choose well in a world of unlimited possibilities is harder still, perhaps too hard.”